As part of its annual wage review decision for the upcoming 2024/2025 financial year, the Fair Work Commission (FWC) has made the decision to increase the National Minimum Wage (NMW) by 3.75% and minimum rates of pay in modern awards by 3.75%.
The increase to the NMW and the minimum rates in modern awards that apply to architecture practices – including the Architects Award 2020 – will apply from the first full pay period commencing on or after 1st July 2024.
The updated wage guides are available on the Institute's HR Hub.
The Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023 seeks to accelerate employer action to close the gender pay gap. The Amendment will come into effect 1 April 2024.
View the Institute’s summary update here and learn more at the Workplace Gender Equality Agency website.
There are several elements which may combine to provide an increase to an employee's remuneration. Each year, Fair Work Australia's Annual Wage Review makes a determination as to the increase to the Federal Minimum Wage and also to minimum wages in Modern Awards. Any increase determined by FWA will become effective as of the first full pay period on or after 1st of July each year, and must be passed onto those award paid employees. This increase may also affect any employers who have enterprise agreements, which have terms providing for increases progressively over the life of the agreement which are not necessarily linked to the annual wage review process. Transitional provisions contained in an award that relate to minimum wage obligations or penalties and loadings may also contribute to the increase of an employee's wage. It is prudent that employers pay attention to these provisions when calculating the absolute minimum entitlements for award covered employees.
Some modern awards also provide for increases to a person's wage on the basis of length of service or age. For example, the Clerks Private Sector Award provides for an increase in wage once an employee's anniversary date is achieved. Other awards, such as the Architects Award 2020, provide increases to some employees' rates of pay on the basis of how much experience the employee has completed within the industry. Similarly, many traineeship and apprenticeship agreements and those covered under the National Training Wage Scheme also have mandatory increases in wage for employees on the basis of years out of school, completion of skills within the qualification, and the date of birth of the person. This also applies to employees who are considered as juniors for the purpose of their particular award and which provide for an increase to their wage on the basis of how old they are.
It should be noted however that for employers who are providing above award rates of pay to employees, there may still be an obligation for you to increase an employee's wage when the award rate rises. Unless their contract of employment makes provision for absorption of these increases to the minimum rate of pay, employers may be obligated to pass such increases in addition to over award payments currently being paid.
While Clause 2 of most modern awards provides that there is no obligation for employers to maintain above-award wages as a result of an increase to the modern award, for those providing all-up rates of pay or annualised salaries which are inclusive of allowances and penalty rates or shift loadings should ensure that the total amount provided to the employee is not less than what they would be entitled to under a modern award. In addition, there may also be a contractual obligation or company policies that may require an employer to increase an employee’s wage. Employers should check employment contracts and policies to ensure awareness of any obligations to their staff.
Performance reviews and appraisals can also influence remuneration increases that an employer provides. Unless otherwise contractually stipulated or provided for in a modern award, there is no obligation on an employer to provide increases on the basis of performance. Performance reviews provide an incentive to employees to strive towards attaining work related goals and targets, and many employers link these to providing an increase to an employee's wage. Having a routine and meaningful performance appraisal process can assist in the smooth operations of the business, and can also help identify performance issues and address them before they become problematic.
Many award-free employees receive performance-related remuneration increases, which can be discretionary in size unless otherwise stipulated. Many businesses link these size increases to a range of indices, such as business profits, Annual Wage Review increases, Consumer Price Index, Average Weekly Ordinary Time Earnings (AWOTE), Labour Price Index and other industry-specific indicators, such as market wages.
It should be noted that there is no hard-and-fast rule as to what to link these increases to, however it is not generally recommended to use one particular benchmark, as this could lead to undervaluing of job descriptions and salaries for award-free employees. Employers should do due diligence before committing to a particular remuneration policy within their business.
Overall, employers should be aware of the various elements which could lead to an increase in their employees' wages. Given the nuances within modern awards and enterprise agreements, there may be multiple occasions during the year when an employee's minimum wage may increase for a number of reasons. Similarly, award-free employees or those paid in excess of the minimum award wages, employees may be entitled to changes in wages on the basis of contractual entitlements. It is crucial that employers plan for these increases in advance to ensure that they are complying with their obligations under a modern award, enterprise agreement, company policy or common-law agreement, to minimize a claim of underpayment of a statutory entitlement or a breach of contract, which can have far reaching consequences for businesses in the future.
This note was reviewed for currency by HR Advice Australia.
Further reading
Further information is available on the Institute's HR Hub - refer to details below, and see HR Hub section Pay.
See also: Parlour Guide: 01 Pay equity
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